Morgan Stanley at Work has released its second edition of the "Liquidity Trends: Perspectives from Private Company Leaders" report, which examines the state of liquidity events among private companies. The report highlights a growing trend towards planning for liquidity events amid economic and market uncertainties.
Key findings indicate that equity compensation adoption has increased significantly, with 76% of companies now offering such plans, up 11% from 2021. This trend is not limited to executives, as inclusion rates are high among large companies. Additionally, all decision-makers agree that equity compensation will play a larger role in attracting and retaining talent over the next five years.
The report also reveals that four out of five equity compensation decision-makers feel pressured to facilitate a liquidity event, with investors and employee stock owners being typical sources of this pressure. As of January 2025, 45% of private companies reported aiming for an initial public offering (IPO), a significant increase from 13% in 2023. However, fewer companies now plan to remain private long-term.
Despite the interest in IPOs, tender offers have gained traction as the preferred near-term option for liquidity events. Tender offers are favored by 39% of respondents compared to 31% who prefer IPOs. However, only 5% feel very prepared to execute a tender offer versus 41% who feel ready for an IPO.
Kate Winget, Chief Revenue Officer at Morgan Stanley at Work, noted the complexity involved in executing liquidity events due to factors like vesting schedules and tax implications. She emphasized the importance of having expert teams ready to manage these processes effectively.
Michael Gaviser, Head of GIMA at Morgan Stanley Wealth Management, observed a rise in interest around private markets among both retail and institutional investors amidst public market uncertainty. He highlighted efforts to democratize access to robust liquidity solutions in secondary markets.
Morgan Stanley Wealth Management recently launched its Private Markets Transaction Desk service to assist eligible shareholders and investors with buying and selling private company shares in secondary markets.
The full report is available through Morgan Stanley at Work's channels. The survey underpinning the report was conducted with senior leaders at private companies offering equity compensation plans between January and February 2025.